British Midland International (BMI) is reviewing the future of its domestic
route network at Heathrow, blaming BAA price increases for “killing” UK air
links.

The carrier, the airport’s second largest operator, will cut its Manchester flights from six daily to four and is considering closing its loss-making Glasgow route.

It follows a series of price rises at Heathrow that have dented the profitability of shorter flights.

Cuts are likely to be welcomed by green campaigners who say domestic flights are unnecessary in the era of high speed rail.

However, route closures would hand British Airways a monopoly and will dismay politicians and businesses in Scotland and Northern Ireland.

BMI, a fully- owned subsidiary of German carrier Lufthansa, will use slots created by domestic cutbacks for more lucrative international routes instead. Its spokesman said: “We never comment on rumours.” But a source said: “The domestic network has been under review. Higher charges are killing domestic air travel at Heathrow.”

BAA insists charges are not to blame, and that domestic routes have been in doubt ever since a third runway was ruled out by the Coalition, limiting future growth.

BMI has made no firm decision on Glasgow, but the route has been losing millions of pounds each year and dropping it would cause maximum political embarrassment for BAA, which owns and operates both airports.

Glasgow is also significant as it was Britain’s first deregulated domestic airline route, launched by former owner Sir Michael Bishop in 1981 in the first challenge to what was then a national monopoly for state-controlled BA. One of the threatened flights still carries the original flight number, BD1.

From April, prices for the cheapest one-way BMI ticket from Heathrow to Glasgow will rise by £10 as BAA puts up its passenger fee to £23.60. It follows November’s 10pc increase in Air Passenger Duty on short-haul flights from £11 to £12, and leaves just £10 to cover BMI’s costs out of a £45.60 ticket.

In addition, Heathrow has increased its lowest landing fees paid by airlines from £220 to £1,000, making it highly uneconomic to operate smaller aircraft such as BMI’s smallest planes, the 49-seat Embraer regional jets.

BMI’s Austrian CEO, Wolfgang Prock-Schauer, last year announced cuts on some domestic routes, from eight a day down to five as part of £100m in annual cost cuts. He said BAA was “unfairly penalising domestic passengers at Heathrow” and added that he was “outraged” by the increases.

A spokesman for BAA denied the increases were to blame, saying: "We do not comment on commercial decisions by airlines but slots at Heathrow are scarce and it is no surprise that airlines will seek to make the most efficient use of them."

An industry source said: "BMI has been losing millions of pounds every year on the Heathrow to Glasgow route alone so higher charges will have made little difference. Ever since plans for a third runway at Heathrow were shelved, the outlook for links to Scotland and Northern Ireland has not been good. Lack of capacity at Heathrow is what is driving airlines towards longer distance flights."

BMI holds one in ten slots at Heathrow, and together with Star Alliance partners such as Swiss, United and Continental, has 33 per cent.

Cutting back on domestic services, which feed into Star Alliance long haul flights at Heathrow, would have been unthinkable only a decade ago, but faster rail links and competition from no-frills rivals such as easyJet have eroded income.

It is understood the airline could drop one or two destinations but retain several daily flights on surviving routes to appeal to profitable business passengers.

Its no frills subsidiary, BMIBaby, could step in to serve Glasgow from Stansted instead.

In the past four years BMI has shifted focus at Heathrow, ending services between Heathrow and Leeds Bradford, Durham Tees Valley, Jersey and Inverness – despite holding a monopoly on all four routes – and dropping flights to Paris and Brussels following competition from Eurostar.

Over the same period, it has expanded into more profitable niche medium haul destinations such as Moscow, Cairo and Riyadh. It begins flights to the Libyan capital, Tripoli, next month and plans to announce more new routes this year.